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MUMBAI: A new segment has emerged in the hospitality industry— arbitration—and business is booming. Earlier this year, the sales team at a five-star hotel in central Delhi was pleasantly surprised to see almost all their suites booked solid for a week. Nattily dressed lawyers from two competing law firms, carrying files, laptops and tablets, along with their warring clients, occupied the rooms, while the banquets and fine-dining restaurants buzzed with activity during what were otherwise slack hours. The two sides were trying to settle a corporate battle through arbitration.

Around the same time, another five-star hotel nearby hosted a separate paired set of lawyers and clients in another arbitration matter. Here, the presidential suite had been hired rather than the banquet hall to keep the media at bay.

Both hotels raked in money during the off season—in terms of room rent as well as business for about a week from banquets and food and beverages. Hotels such as these are benefitting as arbitration cases rise among smaller and mid-sized companies, especially when foreign investors are involved, as they look for neutral venues to settle their differences. For premium hotel chains, the segment contributes at least 10-12 per cent of business and is growing. Hoteliers expect business from it to increase by almost 40 per cent year on year.

"We don't have independent business centres geared for arbitration events and law firms would not want to have it in their offices due to privacy. So it is convenient to have them in hotels," said Akshay Chudasama, senior partner at law firm JSA, who has taken part in such meetings.

According to a study by PwC in 2013, 91 per cent of companies prefer arbitration over litigation to resolve their disputes. "And a hotel is a 'neutral' venue for these kinds of meetings," Chudasama said. Delhi's Taj Palace hotel has hosted nine arbitration meetings since January compared with three in 2013. The Lalit in New Delhi has seen a 60 per cent rise in demand from arbitration meetings in the past six months.

"We have a marketing plan to target law firms nationally and provide them facilities and amenities customized as per their needs and requirements," said Lalit general manager Vivek Shukla.

The rise in alternate dispute resolution has prompted the Taj Mahal Hotel on New Delhi's Man Singh road to introduce an 'arbitration package' that includes access to legal journals, banquet space for 20 guests with specially priced lunches, a hefty discount at the Rick's bar and so on.

"The need was stated by the lawyers and we introduced offerings customised for this segment," said general manager Satyajeet Krishnan. The hotel recently modernized its exclusive lawyers' library with the latest selection of legal books and journals.

The Shangri-La in Delhi has created a specific area in its banquet hall geared to arbitration meetings. It has a head table with seating down two sides for both parties and a row behind that for observers. "Lawyers always want preferential treatment and these kind of meetings require utmost privacy," said Alok Chakravarty, director, sales and marketing. A single arbitration meeting could generate business of Rs 40-60 lakh, he said. JW Marriott Bangalore is tying up with law firms across the country to target this segment.

"Many of the large law firms involved with arbitration use their conference rooms, and spaces at venues (in Delhi) such as the India Habitat Centre, India International Centre, Ficci (Federation of Indian Chambers of Commerce and Industry) and at the high court for arbitration," said Rajiv Luthra, managing partner at the Luthra & Luthra law offices. "They try to avoid hotels because of confidentiality issues. But many small and mid-sized law firms that may not have in-house facilities may be using hotels."

An arbitration meeting generally spans five-seven days and has 15-20 delegates including top management, an arbitrator, apart from a battery of lawyers and observers. These meetings call for banquet halls, meeting rooms, business centres and F&B, apart from accommodation. "The entire working setup is nowadays available in hotels and they also customize the tariffs, which makes it convenient," said a spokesman of engineering firm Larsen & Toubro (L&T), which prefers to conduct its arbitration meetings in hotels.

"Apart from Indian companies, international arbitration proceedings also take place in the hotel," said Biswajit Chakraborty, general manager, Sofitel Hotel at the Bandra Kurla Complex, one of Mumbai's big business districts where many big MNCs and banks have offices.